Sticking to financial resolutions is not impossible

Start of a New Year is always magical, unveiling a new world of possibilities. A sense of hope and a will to improve takes over, encouraging people to reinvent and change life for better. Right from being more health conscious to learning a new skill, everyone targets certain aspects of life where they wish to have breakthroughs. Better money management is one key aspect which features on most wish lists of 'things to do' in the New Year.

According to a study, saving money is one of the top five New Year's resolutions but is also one of the most commonly failed one. Majority of respondents in the same study mentioned that they give up on their resolution before January 31. Once the initial enthusiasm fizzles out, staying motivated becomes quite challenging, which eventually leads to abandoning financial goals like saving more, investing wisely, repaying debt or creating wealth. If you too find it difficult to see your financial resolutions through, below are a few steps to help you stay on track:

Break down your goals

The goal of wealth-creation may seem overwhelming but a goal to invest say 10% of your salary or to start a Systematic Investment Plan (SIP) of say Rs 2,000 per month does not seem so intimidating. Once you have decided your financial goal for the year, break it into smaller, specific steps. Put a timeline against each task to monitor your progress. By doing this exercise diligently, you can prepare a blueprint to fulfill your financial promises. A plan in hand gives you a clear sense of purpose and direction, making even daunting goals seem possible. Dissecting your bigger goal into more realistic, achievable steps is also a great way to stay motivated, as every small achievement along the way will encourage you to work even harder to realise that big target.

Monitor your progress

Once you break down your goals, it becomes easier to monitor the progress that you make in your journey. Put down your targets on a piece of paper and stick it to your refrigerator or your mirror to serve as a daily reminder. At the end of each week, note your accomplishments against your targets. If you have cut on your unnecessary expenses to save more in a particular week, put a 'smiley' against your goal 'spend less/save more'. If you fail to make any progress, put an 'upside-down face' to reflect how it feels when you digress from your targets. At the end of each month, take some time out to review your financial habits as well. Check if your attitude towards money matters aligns with your goals or needs to be adjusted.

Use digital tools to stay on track

Use online tools to cement your commitment to your financial goals. For instance, if you have decided to invest 10% of your savings into mutual funds, give standing instructions to debit your bank account every month with that amount. This one-time effort will ensure that you stay true to your investment goal throughout the year. There are a number of money management apps which help you to keep a check on your monthly expenses to ensure that you do not go overboard. You can also download budgeting apps which provide you feedback on where you are spending and how much money you have remaining. These tools can help you to stay more disciplined.

Don't be hard on yourself

Managing finances can be stressful, especially in today's world of instant gratification. The desire to take a short vacation or to buy that fancy watch at times overpowers the will to save and invest. If you find yourself slipping on your goals, don't get into the self-doubt and self-criticism spiral. Constantly forcing yourself to curtail your expenses, to save more, will soon make you resent the whole idea of getting your finances in order. Do keep aside some money for self-care and prioritise your spends. An occasional splurge should not make you feel guilty as long as you do not make such events a frequent occurrence.

Patience is the key

Anything worth building takes time. When you start exercising, you do not see changes in your body overnight. Following a diet and exercising regularly over a period of time yield you the result that you want. Similarly, saving and investing will not create wealth for you overnight. Conduct thorough research to identify the right investment avenues for your money based on your goals. If you keep your goals at the core of all your activities and stick to your plan, the results will surely follow. Remember that an SIP of Rs 1,000 per month for one year will give you Rs 12,670 at 10% pa. But the same amount SIP for 10 years will give you Rs 206,552 at 10% pa. With steady efforts, you will get phenomenal results in the long-run only if you are patient.

Lean on friends and family

Seek help from friends and family whenever you find yourself lagging behind. Advice from friends who are better at money management can help you identify solutions to your challenges. Similarly, you can work with your partner to make smart money decisions to fulfill your joint financial goals. If you feel that you need financial expertise beyond the purview of your inner circle, seek guidance from professional financial planners to stick to your resolutions.

DON'T LOSE FOCUS

Saving money is one of the top five New Years resolutions, but also one of the most commonly failed one By not letting the initial enthusiasm fizzle and staying motivated, you can achieve financial goals like saving more, investing wisely, repaying debt or creating wealth

The writer is MD & CEO, Axis Securities